Australia April employment unexpectedly falls, jobless rate ticks up
AUSTRALIA employment unexpectedly dipped in April, following two months of outsized gains, while the jobless rate also ticked up, in a sign that the red-hot labour market might be cooling, lessening the pressure for more rate hikes.
Figures from the Australian Bureau of Statistics released on Thursday (May 18) showed net employment fell by 4,300 in April from March when they rebounded by a revised 61,100. Market forecasts had been for a rise of 25,000.
The jobless rate ticked up to 3.7 per cent from a near 50-year low of 3.5 per cent, when analysts had expected no change. Hours worked, however, increased by 2.6 per cent in the month.
The local dollar fell 0.4 per cent to US$0.6635 and three-year bond futures reversed earlier declines to be flat at 96.87.
“We expect to see a gradual softening in labour market conditions over 2023 as the impact of interest rate increases to date start to bite,” said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.
“Whether today’s data are the start of that process or just typical volatility will be a key question at the upcoming Reserve Bank of Australia (RBA) meeting. At the margin, these data weaken the case for another rate hike,” Langcake added.
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Data from employment services provider SEEK on Thursday showed job ads fell for the third straight month in April, but they remained 25 per cent above pre-Covid levels.
The RBA has already hiked interest rates by a hefty 375 basis points to an 11-year high of 3.85 per cent, including the surprise increase earlier this month, as it warned of upside risks to the inflation outlook.
Inflation, which was running at 7 per cent, is only projected to return to the top of the bank’s 2-3 per cent target range by mid-2025, as governor Philip Lowe sought to preserve the strong job gains during the pandemic.
A major relief for policymakers is that the risk of a damaging price-wage spiral remained low so far, with data on Wednesday showing that quarterly gains in wages missed forecasts with a rise of 0.8 per cent, which would lessen some pressure for the RBA to hike next month.
Thursday’s data showed full-time employment fell by 27,100 last month, and the participation rate held near record levels at 66.7 per cent, suggesting the supply of labour is rising to meet demand, thanks to more migrants entering the workforce, helping alleviate some labour shortages. REUTERS
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